Evertec, Inc.

Good afternoon, everyone, and welcome to the Evertech Third Quarter 2020 Earnings Conference Call. Today's conference call 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's website at www.evertechinc.com. I'll now hand the call over to Mac.

Thanks, Kay, and good afternoon, everyone. We achieved strong results with the highest quarterly performance in our company's history driven by consumer demand as the economy reopens, as well as the impact from new business. Additionally, we have continued to execute on our Latin America initiatives, which will position us for growth over the longer term. Beginning on slide four, total revenue was $137 million for the third quarter, an increase of 15% compared to 2019. Adjusted EBITDA was $70 million, an increase of 26% as compared to the prior year. An adjusted earnings per share was 65 cents, an increase of 38%. We generated significant operating cash flow year-to-date of $121 million, and we returned approximately $18 million to our shareholders through share repurchases and dividends. Additionally, our liquidity as of September 30th was $246 million. Moving on to our update on slide five for Puerto Rico. We continue to see significant transaction revenue as a result of the federal and Puerto Rico government stimulus programs earlier in the quarter, timing of tax payments, and the further reopening of businesses. Merchant revenue surged in July to over 30% growth, tapering off in the subsequent months for a total quarterly revenue growth of 16%. The Puerto Rico government further reduced COVID restrictions beginning in early September, However, consumer demand has been tempered by the expiration of the stimulus support. That said, we are encouraged by the recently announced release of $13 billion in federal funds to rebuild the electric infrastructure on the island, which will be a longer-term benefit to the economy. Additionally, we would expect to see a more immediate impact from the additional $300 per week of unemployment benefit, as outlined by the President's Executive Order, which was approved by FEMA for Puerto Rico only a few weeks ago and began to be distributed last week. Our recent contract with the Department of Education, in which we recently provided new computers and support to the public education system, produced a one-time revenue increase of approximately $4.4 million in the quarter. We also continue to benefit from our digital channels related to the ATH network. Our ATH mobile and ATH mobile business continue to deliver superior growth and we are encouraged by the adoption rate of both consumers and businesses. We have also expanded the contactless functionality through QR codes from 400 merchants in July to over 1,500 businesses today. On slide six, I'll review our Latin American business. Regarding the environment, we continue to see different responses to the COVID-19 pandemic and varying levels of restrictions and reopenings. Chile and Colombia have stabilized their COVID-19 trends and recently lifted certain restrictions. Mexico and Brazil are allowing many merchants to reopen with Brazil recently achieving more than a month of stability. However, we remain cautious about the outlook throughout the region given the continuing uncertainty surrounding the virus. Despite the pandemic, we remain focused on executing on our LATAM growth initiatives. We continue to leverage our investment in place to pay by localizing the gateway in Costa Rica and Panama. This platform has enabled our partner banks to transition existing merchants to the new gateway, as well as add new e-commerce merchants. Our PayStudio acquiring platform is now in production with two new customers, Alelo in Brazil and ANDA in Uruguay. As we mentioned on our Q4 2019 call, Alelo is one of the largest financial service companies in Brazil, specializing in benefits, incentives, and corporate expense management. ANDA is the largest nonprofit in Uruguay which serves as a benefits provider for a wide range of services, such as medical, legal, travel, and other services through employee payroll deductions. Both clients were term license agreements. We continue to expect to be in production on our acquiring processing services with Santander and Chile and our collection platform with Citi Banamax by the end of the year. We anticipate all of these wins to contribute to growth in 2021 for our Latin America payment segment and over the longer term. As always, we have continued to invest in our employees and communities. Recently, we completed an employee engagement survey, and despite the challenges of working through the COVID pandemic, we saw a 13% increase in participation in the engagement survey to 85%, as well as significant improvements in many areas of employee satisfaction. While we were delighted with the engagement and the feedback, we still have areas of opportunity that we will focus on this year and next. In Puerto Rico and across Latin America, we continued our commitment to the scholarship program, which is in its sixth year, and we awarded over 160 scholarships, an increase of almost 20% from the previous year. This year, we were particularly focused on gender equality, and through specific initiatives, we were able to achieve a balance of 50% female and 50% male STEM scholarship recipients in Puerto Rico. Further, over the past year, we have focused on our environment, social, and governance We have seen increases in the scores provided by various rating agencies. We are proud of our progress on these important areas of corporate citizenship. With that, I will now turn the call over to Joaquin.