Evertec, Inc.

Good afternoon, everyone, and welcome to Evertech's second quarter 2020 earnings conference call. Today's conference is being recorded. At this time, I would like to turn the call over to Kay Sharpton, Vice President of Investor Relations. Please go ahead.

Thank you, and good afternoon. With me today are Max Schuessler, our President and Chief Executive Officer, and Joaquin Castrillo, our Chief Financial Officer. Before we begin, I'd like to remind everyone that this call may contain forward-looking statements and should be considered in conjunction with cautionary statements contained in our earnings release and the company's most recent periodic SEC report. During today's call, management will provide certain information that will constitute non-GAAP financial measures under SEC rules, such as adjusted EBITDA, adjusted net income, and adjusted earnings per common share. Reconciliations to GAAP measures and certain additional information are also included in today's earnings release and related supplemental slides, which are available in the investor relations section of our company website at www.evertechinc.com. I'll now hand the call over to Mac.

Thanks, Kay, and good afternoon, everyone. While we were impacted by the pandemic, we were encouraged to see improvement throughout the quarter in our transaction-based business results. We have continued to execute on both product innovations and our priorities in Latin America. Beginning on slide four, total revenue was $118 million, a decrease of 4% compared to 2019. Adjusted EBITDA was $50 million, or a 13% decrease as compared to the prior year, and adjusted earnings per share was $0.38, a decrease of 25% compared to last year. Despite the headwinds, we generated significant operating cash flow year to date, of $87 million, $11 million above prior year due to our results and effective cash management. We returned approximately $14 million to our shareholders through share repurchases and dividends. Additionally, our liquidity as of June 30th was $234 million. Moving on to our business update on slide five for Puerto Rico. As the Puerto Rico government started to reduce restrictions beginning in early May, there was continued improvement in sales volume and transaction volumes with significant uplift after June 16th. Most businesses were allowed to reopen at that time, including entertainment venues, with some restrictions such as required masks and limitations on the maximum capacity. Our merchant acquiring revenue increased from a trough in April to more than a 20% increase year-over-year in June, likely due to pent-up consumer demand and the benefits from federal programs such as CARES and other funding from the government of Puerto Rico. We continue to focus on serving our clients' needs, on innovation, and on executing new opportunities. For example, in the second quarter, we worked with the Department of Labor to distribute unemployment benefits that were awarded as part of the CARES Act. Additionally, we engaged in a new contract with the Department of Education, in which we recently provided new computers and support to public education teachers. Our innovation related to the ATH network continues to benefit us, as we saw a significant uptick in our digital payment channels. For example, our ATH mobile P2P transactions in June were up over 50% compared to last year, and our ATH mobile business revenue increased more than 400% over last year. We are encouraged to see consumers embracing these digital solutions as this trend has the potential to continue to drive additional growth of the payment market in Puerto Rico. Lastly, we are excited about our recently launched contactless functionality through QR codes with over 400 businesses now using this feature. This solution allows the consumer to use their ATH mobile app for a contactless payment transaction at the point of sale. On slide six, you can see an example of the transaction. The user takes a picture with their phone of the QR code and that initiates a payment. The feedback has been highly positive from both the businesses and the pilot, as well as the consumers. Most of the fast food restaurants on the island have implemented this payment option, and we will continue to expand this convenient solution to more of our merchants over the coming months. On slide seven, I'll review our Latin American business. Regarding the environment, we are seeing different responses to the COVID-19 pandemic in varying levels of restrictions and reopenings. For example, in Santiago, Chile, there was an initial limited reopening, and then as cases of COVID-19 began to rise, again, lockdowns and restrictive measures were reestablished. Costa Rica and Panama have also returned to restrictions due to a rise in new cases. Mexico has allowed construction and tourism to reopen even though cases have continued to rise. In Brazil, cases continue to rise and the response measures vary between states. Despite the ongoing impact of COVID-19 in the geographies we serve, we remain focused on executing our LATAM growth initiatives. As it relates to Santander, Chile, and City of Anamax, we continue to make progress with each client throughout the quarter and are targeting to launch both programs before the end of 2020. While our results for the quarter were impacted by the effects of the pandemic, both in Puerto Rico and Latin America, we believe our unwavering investment in our employees, customers, and communities during this time of crisis strengthens our relationship with each of our stakeholders over the long run. With that, I will now turn the call over to Joaquin.