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Section 1: 8-K (8-K)

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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): May 1, 2018
 
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 May 1, 2018 the Company issued a press release announcing its preliminary results for the first quarter ended March 31, 2018. 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: First quarter earnings issued by EVERTEC, Inc. dated May 1, 2018.






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: May 2, 2018
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

393307038_everteclogoa03.jpg
 
EVERTEC REPORTS STRONG FIRST QUARTER 2018 RESULTS
INCREASES 2018 GUIDANCE RANGE



SAN JUAN, PUERTO RICO - May 1, 2018 - EVERTEC, Inc. (NYSE: EVTC) (“Evertec” or the “Company”) today announced results for the first quarter ended March 31, 2018.

First Quarter 2018 and Recent Highlights
Revenue grew 9% to $110.3 million
GAAP Net Income attributable to common shareholders was $23.0 million or $0.31 per diluted share flat when compared with the prior year
Adjusted EBITDA increased 10% to $54.0 million
Adjusted earnings per common share was $0.47, an increase of 4%

Mac Schuessler, President and Chief Executive Officer, stated “We are very pleased with our first quarter financial results that significantly exceeded our expectations. We are encouraged by the recovering sales volumes in Puerto Rico, the positive contribution of our PayGroup acquisition and our continued solid execution. Due to our strong first quarter results and our expectations of continued elevated spending driven by relief programs and insurance proceeds in Puerto Rico, we have increased our 2018 guidance. "

First Quarter 2018 Results

Revenue. Total revenue for the quarter ended March 31, 2018 was $110.3 million an increase of 9% compared with $101.3 million in the prior year. Revenue growth in the quarter reflected the impact of the acquisition of PayGroup as well as elevated sales volumes in Puerto Rico driven by post-hurricane recovery activity, federal relief and benefit programs and insurance proceeds.

Net Income attributable to common shareholders. For the quarter ended March 31, 2018, GAAP Net Income attributable to common shareholders was $23.0 million, or $0.31 per diluted share, flat as compared to the prior year.

Adjusted EBITDA. For the quarter ended March 31, 2018, Adjusted EBITDA was $54.0 million, an increase of 10% compared to the prior year. Adjusted EBITDA margin (Adjusted EBITDA as a percentage of total revenues) increased 40 basis points to 48.9% compared with 48.5% in the prior year. The increase in Adjusted EBITDA margin was primarily driven by revenue mix changes, the contribution of Paygroup as well as expense management actions.

Adjusted Net Income. For the quarter ended March 31, 2018, Adjusted Net Income was $34.6 million, an increase of 5% compared with $33.0 million in the prior year and included the impact of increased interest

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expense and a higher tax rate in the current year. Adjusted earnings per common share was $0.47, an increase of 4% as compared to $0.45 in the prior year.

Share Repurchases

During the three months ended March 31, 2018, the Company did not repurchase stock and a total of approximately $72 million remains authorized and available for future repurchases under its share repurchase program. 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.

Debt Repayment and Reduction in Revolving Loan Facility in April

On April 17, 2018, the Company paid the final installment of its 2018 Term Loan A of $26 million with a combination of cash on hand and a revolver draw. After this payment, Long-term debt was reduced to approximately $582 million. In addition, on the same date, $35 million of the Revolving Facility expired and the total borrowing capacity of the Facility is $65 million.

2018 Outlook

The Company is revising its financial outlook for 2018 as follows:
 
Total consolidated revenue between $430 million and $440 million representing growth of 6% to 8%
Adjusted earnings per common share guidance of $1.51 to $1.66 representing a range of 3% to13% as compared to $1.47 in 2017
Capital expenditures ranging between $35 and $40 million
Non-GAAP effective tax rate ranging between 12% to 13%

Earnings Conference Call and Audio Webcast

The Company will host a conference call to discuss its first quarter 2018 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, May 8, 2018. 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

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institutions, merchants, corporations and government agencies with “mission-critical” technology solutions. For more information, visit www.evertecinc.com.

Use of Non-GAAP Financial Information

The non-GAAP measures referenced in this release material are supplemental measures of the Company’s performance and 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 believes that they are also frequently used by 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. These non-GAAP measures include EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per common share and are defined below.

EBITDA is defined as earnings before interest, taxes, depreciation and amortization.

Adjusted EBITDA is defined as EBITDA further adjusted to exclude unusual items and other adjustments. This measure is reported to the chief operating decision maker for purposes of making decisions about allocating resources to the segments and assessing their performance. For this reason, Adjusted EBITDA, as it relates to our segments, is presented in conformity with Accounting Standards Codification 280, Segment Reporting, and is excluded from the definition of non-GAAP financial measures under the Securities and Exchange Commission's Regulation G and Item 10(e) of Regulation S-K. Our presentation of Adjusted EBITDA is substantially consistent with the equivalent measurements that are contained in the senior secured credit facilities in testing EVERTEC Group’s compliance with covenants therein such as the senior secured leverage ratio.

Adjusted Net Income is defined as net income adjusted to exclude unusual items and other adjustments

Adjusted Earnings per common share is defined as Adjusted Net Income divided by diluted shares outstanding

We use Adjusted Net Income to measure our overall profitability because we believe better reflects our comparable operating performance by excluding the impact of the non-cash amortization and depreciation that was created as a result of Apollo Global Management LLC’s acquisition of a 51% indirect ownership in EVERTEC Group. In addition, in evaluating EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per common share, you should be aware that in the future we may incur expenses such as those excluded in calculating them. Further, our presentation of these measures should not be construed as an inference that our future operating results will not be affected by unusual or nonrecurring items.

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

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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; 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.

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

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EVERTEC, Inc.
Schedule 1: Unaudited Consolidated Condensed Statements of Income and Comprehensive Income

 
 
Three months ended March 31,
 
 
2018
 
2017
 (Dollar amounts in thousands, except share data)
 
 
 
 
Revenues
 
$
110,274

 
$
101,280

 
 
 
 
 
Operating costs and expenses
 
 
 
 
Cost of revenues, exclusive of depreciation and amortization shown below
 
47,420

 
44,173

Selling, general and administrative expenses
 
13,432

 
10,831

Depreciation and amortization
 
15,867

 
15,684

Total operating costs and expenses
 
76,719

 
70,688

Income from operations
 
33,555

 
30,592

Non-operating income (expenses)
 
 
 
 
Interest income
 
157

 
185

Interest expense
 
(7,679
)
 
(7,036
)
Earnings of equity method investment
 
199

 
143

Other income
 
817

 
1,274

Total non-operating expenses
 
(6,506
)
 
(5,434
)
Income before income taxes
 
27,049

 
25,158

Income tax expense
 
3,935

 
2,020

Net income
 
23,114

 
23,138

Less: Net income attributable to non-controlling interest
 
92

 
109

Net income attributable to EVERTEC, Inc.’s common stockholders
 
23,022

 
23,029

Other comprehensive income (loss), net of tax
 
 
 
 
Foreign currency translation adjustments
 
2,407

 
(645
)
Gain on cash flow hedge
 
1,503

 
618

Total comprehensive income attributable to EVERTEC, Inc.’s common stockholders
 
$
26,932

 
$
23,002

Net income per common share:
 
 
 
 
Basic
 
$
0.32

 
$
0.32

Diluted
 
$
0.31

 
$
0.31

Shares used in computing net income per common share:
 
 
 
 
Basic
 
72,409,462

 
72,636,166

Diluted
 
73,372,835

 
73,154,693


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EVERTEC, Inc.
Schedule 2: Unaudited Consolidated Condensed Balance Sheets 

(Dollar amounts in thousands)
 
March 31, 2018
 
December 31, 2017
Assets
 
 
 
 
Current Assets:
 
 
 
 
Cash and cash equivalents
 
$
53,471

 
$
50,423

Restricted cash
 
10,540

 
9,944

Accounts receivable, net
 
90,037

 
83,328

Prepaid expenses and other assets
 
30,318

 
25,011

Total current assets
 
184,366

 
168,706

Investment in equity investee
 
13,369

 
13,073

Property and equipment, net
 
38,515

 
37,924

Goodwill
 
399,861

 
398,575

Other intangible assets, net
 
273,536

 
279,961

Other long-term assets
 
7,182

 
4,549

Total assets
 
$
916,829

 
$
902,788

Liabilities and stockholders’ equity
 
 
 
 
Current Liabilities:
 
 
 
 
Accrued liabilities
 
$
35,334

 
$
38,451

Accounts payable
 
40,670

 
41,135

Unearned income
 
9,521

 
7,737

Income tax payable
 
4,121

 
1,406

Current portion of long-term debt
 
46,558

 
46,487

Short-term borrowings
 

 
12,000

Total current liabilities
 
136,204

 
147,216

Long-term debt
 
553,140

 
557,251

Deferred tax liability
 
13,033

 
13,820

Unearned income - long term
 
23,695

 
23,486

Other long-term liabilities
 
11,472

 
13,039

Total liabilities
 
737,544

 
754,812

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; 72,429,141 shares issued and outstanding at March 31, 2018 (December 31, 2017 - 72,393,933)
 
724

 
723

Additional paid-in capital
 
8,782

 
5,350

Accumulated earnings
 
172,777

 
148,887

Accumulated other comprehensive loss, net of tax
 
(6,938
)
 
(10,848
)
Total EVERTEC, Inc. stockholders’ equity
 
175,345

 
144,112

Non-controlling interest
 
3,940

 
3,864

Total equity
 
179,285

 
147,976

Total liabilities and equity
 
$
916,829

 
$
902,788


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EVERTEC, Inc.
Schedule 3: Unaudited Consolidated Condensed Statements of Cash Flows
 
 
Three months ended March 31,
(Dollar amounts in thousands)
 
2018
 
2017
Cash flows from operating activities
 
 
 
 
Net income
 
$
23,114

 
$
23,138

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Depreciation and amortization
 
15,867

 
15,684

Amortization of debt issue costs and accretion of discount
 
1,270

 
1,265

Provision for doubtful accounts and sundry losses
 
221

 
96

Deferred tax benefit
 
(1,152
)
 
(1,487
)
Share-based compensation
 
3,637

 
2,006

Loss on disposition of property and equipment and other intangibles
 
11

 
117

Earnings of equity method investment
 
(199
)
 
(143
)
Decrease (increase) in assets:
 
 
 
 
Accounts receivable, net
 
(6,815
)
 
1,119

Prepaid expenses and other assets
 
(5,108
)
 
(5,909
)
Other long-term assets
 
(1,117
)
 
(237
)
(Decrease) increase in liabilities:
 
 
 
 
Accounts payable and accrued liabilities
 
(4,905
)
 
(15,285
)
Income tax payable
 
2,716

 
1,658

Unearned income
 
2,645

 
3,064

Other long-term liabilities
 
183

 
219

Total adjustments
 
7,254

 
2,167

Net cash provided by operating activities
 
30,368

 
25,305

Cash flows from investing activities
 
 
 
 
Additions to software
 
(5,208
)
 
(3,860
)
Property and equipment acquired
 
(4,157
)
 
(2,674
)
Net cash used in investing activities
 
(9,365
)
 
(6,534
)
Cash flows from financing activities
 
 
 
 
Statutory withholding taxes paid on share-based compensation
 
(204
)
 
(1,096
)
Net decrease in short-term borrowings
 
(12,000
)
 
(1,000
)
Repayment of short-term borrowing for purchase of equipment and software
 
(114
)
 
(497
)
Dividends paid
 

 
(7,264
)
Repurchase of common stock
 

 
(3,765
)
Repayment of long-term debt
 
(5,041
)
 
(4,853
)
Net cash used in financing activities
 
(17,359
)
 
(18,475
)
Net increase in cash, cash equivalents and restricted cash
 
3,644

 
296

Cash, cash equivalents and restricted cash at beginning of the period
 
60,367

 
60,032

Cash, cash equivalents and restricted cash at end of the period
 
$
64,011

 
$
60,328



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EVERTEC, Inc.
Schedule 4: Unaudited Segment Information

 
Three months ended March 31, 2018
(In thousands)
Payment
Services -
Puerto Rico & Caribbean
 
Payment
Services -
Latin America
 
Merchant
Acquiring, net
 
Business
Solutions
 
Corporate and Other (1)
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
$
27,168

 
$
20,391

 
$
23,379

 
$
47,921

 
$
(8,585
)
 
$
110,274

Operating costs and expenses
12,933

 
18,060

 
13,141

 
29,015

 
3,570

 
76,719

Depreciation and amortization
2,316

 
2,449

 
420

 
3,519

 
7,163

 
15,867

Non-operating income (expenses)
816

 
1,813

 
4

 
300

 
(1,917
)
 
1,016

EBITDA
17,367

 
6,593

 
10,662

 
22,725

 
(6,909
)
 
50,438

Compensation and benefits (2)
193

 
400

 
190

 
440

 
2,606

 
3,829

Transaction, refinancing and other fees (3)
(250
)
 

 

 

 
(49
)
 
(299
)
Adjusted EBITDA
$
17,310

 
$
6,993

 
$
10,852

 
$
23,165

 
$
(4,352
)
 
$
53,968

 

 
(1)
Corporate and Other consists of corporate overhead, certain leveraged activities, other non-operating expenses and intersegment eliminations.  Intersegment eliminations predominantly reflect the $8.6 million processing fee from Payments Services - Puerto Rico and Caribbean to Merchant Acquiring and cost transfer fees from Corporate and Other to Payment Services Latin America for leveraged services and management fees.
(2)
Primarily represents share-based compensation, other compensation expense and severance payments.
(3)
Primarily represents fees and expenses associated with corporate transactions as defined in the Credit Agreement.


 
Three months ended March 31, 2017
(In thousands)
Payment
Services -
Puerto Rico & Caribbean
 
Payment
Services -
Latin America
 
Merchant
Acquiring, net
 
Business
Solutions
 
Corporate and Other (1)
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
$
26,452

 
$
12,964

 
$
22,485

 
$
47,997

 
$
(8,618
)
 
$
101,280

Operating costs and expenses
11,802

 
12,266

 
13,413

 
29,765

 
3,442

 
70,688

Depreciation and amortization
2,149

 
1,871

 
599

 
4,014

 
7,051

 
15,684

Non-operating income (expenses)
553

 
2,731

 
1

 

 
(1,868
)
 
1,417

EBITDA
17,352

 
5,300

 
9,672

 
22,246

 
(6,877
)
 
47,693

Compensation and benefits (2)
99

 
151

 
95

 
226

 
(1,505
)
 
2,076

Transaction, refinancing and other fees (3)
(660
)
 
 
 

 

 
50

 
(610
)
Adjusted EBITDA
$
16,791

 
$
5,451

 
$
9,767

 
$
22,472

 
$
(5,322
)
 
$
49,159


 
(1)
Corporate and Other consists of corporate overhead, certain leveraged activities, other non-operating expenses and intersegment eliminations.  Intersegment eliminations predominantly reflect the $8.6 million processing fee from Payments Services - Puerto Rico and Caribbean to Merchant Acquiring and cost transfer fees from Corporate and Other to Payment Services Latin America for leveraged services and management fees.
(2)
Primarily represents share-based compensation, other compensation expense and severance payments.
(3)
Primarily represents fees and expenses associated with corporate transactions as defined in the Credit Agreement.


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EVERTEC, Inc.
Schedule 5: Reconciliation of GAAP to Non-GAAP Operating Results 

 
 
Three months ended March 31,
(Dollar amounts in thousands, except share data)
 
2018
 
2017
Net income
 
$
23,114


$
23,138

Income tax expense
 
3,935


2,020

Interest expense, net
 
7,522


6,851

Depreciation and amortization
 
15,867


15,684

EBITDA
 
50,438


47,693

Equity income (1)
 
(199
)

(143
)
Compensation and benefits (2)
 
3,829


2,076

Transaction, refinancing and other fees (3)
 
(100
)

(467
)
Adjusted EBITDA
 
53,968


49,159

Operating depreciation and amortization (4)
 
(7,321
)

(7,461
)
Cash interest expense, net (5)
 
(6,368
)

(5,702
)
Income tax expense (6)
 
(5,567
)

(2,891
)
Non-controlling interest (7)
 
(138
)

(155
)
Adjusted net income
 
$
34,574


$
32,950

Net income per common share (GAAP):
 



Diluted
 
$
0.31


$
0.31

Adjusted Earnings per common share (Non-GAAP):
 



Diluted
 
$
0.47


$
0.45

Shares used in computing adjusted earnings per common share:
 



Diluted
 
73,372,835


73,154,693

 
1)
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. 
2)
Primarily represents share-based compensation and other compensation expense of $3.6 million and $2.0 million for the quarters ended March 31, 2018 and 2017 and severance payments $0.2 million and $0.1 million for the same periods, respectively.
3)
Represents fees and expenses associated with corporate transactions, recorded as part of selling, general and administrative expenses and cost of revenues.
4)
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.
5)
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.
6)
Represents income tax expense calculated on adjusted pre-tax income using the applicable GAAP tax rate.
7)
Represents the 35% non-controlling equity interest in Processa, net of amortization for intangibles created as part of the purchase.

9



EVERTEC, Inc.
Schedule 6: Outlook Summary and Reconciliation to Non-GAAP Adjusted Earnings per Share

 
 
 
2018 Outlook
 
2017 Actual
(Dollar amounts in millions, except share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
 
 
$
430

to
$
440

 
$
407

 
 
 
 
 
 
 
 
Earnings per Share (EPS) - Diluted (GAAP)
 
 
$
0.88

to
$
1.03

 
$
0.76

 
 
 
 
 
 
 
 
Per share adjustment to reconcile GAAP EPS to Non-GAAP Adjusted EPS:
 
 
 
 
 
 
 
Share-based comp, non-cash equity earnings and other (1)
 
 
$
0.23

 
$
0.23

 
0.33

Merger related depreciation and amortization (2)
 
 
$
0.44

 
$
0.44

 
0.42

Non-cash interest expense (3)
 
 
$
0.06

 
$
0.06

 
0.07

Tax effect of non-GAAP adjustments (4)
 
 
$
(0.09
)
 
$
(0.09
)
 
(0.10
)
Non-controlling interest (5)
 
 
$
(0.01
)
 
$
(0.01
)
 
(0.01
)
Total adjustments
 
 
$
0.63

 
$
0.63

 
0.71

 
 
 
 
 
 
 
 
Adjusted Earnings per common share (Non-GAAP)
 
 
$
1.51

to
$
1.66

 
$
1.47

Shares used in computing adjusted earnings per share (in millions)
 
 
 
 
73.5

 
72.9


 
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 11% to 13%).
5)
Represents the 35% non-controlling equity interest in Processa, net of amortization of intangibles created as part of the purchase.


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