EVERTEC, Inc. Q4 FY2024 earnings call

Management Statement and Operational Highlights

• 2024 saw record revenue of $845.5 million, a 22% increase year-over-year, with strong growth across all segments.
• Successfully integrated Sinqia, the largest acquisition in EVERTEC's history, and closed two tuck-in deals (Grandata, Nubity) in Q4.
• LATAM revenue increased 62% year-over-year, with LATAM making up approximately 33% of total revenue in 2024 compared to 10% in 2015.
• Puerto Rico conditions remained stable, with economic activity slightly down but still healthy.
• Implemented cost efficiency measures resulting in margins exceeding expectations for 2024.

Segment Performance

• Merchant Acquiring: Net revenue increased approximately 16% year-over-year to $46.6 million, driven by improved spread and sales volume. Adjusted EBITDA was $19.9 million with a margin of 42.7%.
• Payment Services Puerto Rico and Caribbean: Revenue in the quarter was $54.8 million, a 4% increase year-over-year. Adjusted EBITDA was $31.3 million, up approximately 2% year-over-year, with a margin of 57.2%.
• Latin America Payment & Solutions: Revenue in the quarter was $77.9 million, up approximately 18% year-over-year. Adjusted EBITDA was $25.1 million, up approximately 38% year-over-year, with a margin of 32.3%.
• Business Solutions: Revenue was $62.4 million, an 8% increase year-over-year. Adjusted EBITDA was $24.4 million, up approximately 22% year-over-year, with a margin of 39%.

Guidance

• 2025 revenue expected to be between $889 million to $899 million (5.1%-6.3% growth) on reported basis, and 5.5%-6.7% on constant currency.
• Adjusted EPS expected to grow 1.8%-5.2% from 2024's $3.28, or 2.6%-6% on constant currency.
• Adjusted EBITDA margin expected to be 39.5%-40.5%, with effective tax rate 6%-7%.
• Impact of 10% discount on certain MSA services starting 2025, with cost efficiencies planned to offset the headwind.

Risks

• Impact of the 10% discount on certain MSA services starting in 2025.
• Currency fluctuations, particularly affecting the LATAM segment.
• Client attrition in LATAM, notably Mercado Libre.

Question and Answer

Q: Thoughts on midterm guidance for segments?

A: Focused on giving guidance for 2025 and are currently focused on areas of focus for that year.

Q: Update on Sinqia performance?

A: Growth is accelerating, with focus on tech upgrade, contract renegotiation, and margin optimization.

Q: Bringing processing business to Brazil?

A: Focus on existing businesses, with reacceleration seen and interest in payments products.

Q: 10% discount and cost efficiencies?

A: Confident, with cost initiatives already started and having an impact on Q4 results.

Q: Transferable skills from Puerto Rico to LATAM?

A: Yes, expertise in payments and platforms is transferable across the region.

Q: GetNet Chile update?

A: Moving to price per transaction, with no more one-time events.

Q: M&A market in Latin America?

A: Focused pipeline, good opportunities, and will continue with M&A activities.