Evertec, Inc.

Good day and welcome to the Evertech Incorporated first quarter 2021 earnings conference call. All participants will be in a listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, please press star then one on your touch tone phone. And to withdraw your question, please press star then two. Please note this event is being recorded I would now like to turn the conference over to Ms. 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 for 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 Vestry Relations section of our company website at www.evertechinc.com. I'll now hand the call over to Mack.

Thanks, Kay, and good afternoon, everyone. We achieved strong results in the first quarter, driven by consumer demand as we lap the one-year anniversary of the pandemic, as well as benefit from the impact of new business contracts in Latin America. Given the Q1 results, the passage of the new stimulus bill, as well as our execution on our share repurchase program, we are raising our expectations for 2021, and Joaquin will provide further details. Beginning on slide four, total revenue was $140 million for the first quarter, an increase of 14% compared to 2020. Adjusted EBITDA was $69 million, an increase of 22% as compared to the prior year. And adjusted earnings per share was 62 cents, an increase of 35%. We generated significant operating cash flow during the quarter of $35 million and we returned approximately $80 million to our shareholders through dividends and execution of share purchases. Additionally, our liquidity remains strong at $273 million as of March 31st. Moving on to our update on slide five for Puerto Rico. We continue to see significant transaction revenue growth as a result of the federal stimulus programs and increased consumer demand. For example, merchant revenue growth in January and February was low double digits and then surged in March to over 46% growth as we lapped the COVID-19 lockdown last year for a total quarterly revenue growth of 23%. We also continue to benefit from growth in our digital payment channels related to the ATH network. Our ATH mobile and ATH mobile business delivered 160% revenue growth. Further, we are encouraged by the adoption rate of QR codes by both consumers and businesses. We have expanded the contactless functionality to almost 4,000, or approximately 13% of our merchants, and have added QR code payment functionality to pay at the table restaurants. Additionally, toward the end of the quarter, we were pleased to extend and expand our relationship with First Bank, driven by the recent consolidation of First Bank's incentive there. We extended our existing agreement which was previously through 2025, an additional five years to 2030, and expanded the relationship to include the new merchant contracts previously part of Santander. Regarding other recent contracts, we are leveraging our printing capacity and signed one of the largest printing contracts in the company's history. The contract is anticipated to benefit our business solutions segment in the back end of 2021 and is a testament of our ability to grow on the island. Another recent change in the business solution segment is the sale of ticket pockets, an electronic ticket sale process, which represented a small portion of our revenues. We did not see this business at a core competency, and its transaction closed in April. As we consider the ecosystem in Puerto Rico, the vaccination efforts continue to progress, and the government expects to have 70% of the population with both doses by the end of the summer. But COVID cases have spiked up after spring break, bringing back some of the lower capacity limits and other measures, but nothing close to a lockdown. From a macroeconomic perspective, we expect to continue benefiting from the recent passage of the new stimulus support, as well as expanded EBC benefits that will run through mid-year. We are also encouraged by the recently announced release of over $900 million in federal funds for the school system, and the release of $8.2 billion in hurricane recovery-related funds which will contribute to the long-term recovery and mitigate future disaster risk. Turning to Latin America on slide six. Regarding the environment, we continue to see different responses to the COVID-19 pandemic in varying levels of restrictions, reopening, and vaccine levels. Chile, for example, is third in the world for percentage of vaccinated population. However, they're still seeing a significant rise in new cases. While we remain cautious about the outlook throughout the region, given the continuing uncertainties surrounding the virus, we were pleased to have driven double-digit revenue growth in the first quarter as a result of the newly implemented payment solutions in Chile. Centendaire has launched a significant marketing campaign and has already signed over 10,000 merchants, which is halfway to their annual goal in 2021 of 20,000 merchants. MercadoLibre has also been strong in their debit card issuing in Mexico. which we will benefit from as those cards begin to be used. We're also pleased with the expansion of our place-to-pay e-commerce gateway and have more than 1,800 active merchants on the platform and anticipate further growth throughout the region. Lastly, I want to comment on our recently announced management changes and a couple of noteworthy items in our proxy annual report and ESG summary. We are pleased to add Diego's Viglianco as Chief Operating Officer and to name Phil Storer as Chief Strategy Officer. Phil has been with us since 2012 and is currently serving as our Chief Operating Officer. Shifting him to our Chief Strategy Officer will help us drive alignment of product strategy and customer excellence. Diego has a wealth of experience in Latin American payments as well as strong technical expertise and we are delighted to add him to the team. We believe these changes in our leadership will further strengthen Evertech as we focus on future opportunities. Additionally, this year in our proxy, we have nominated a new board member, Kelly Barris. With her addition, we will increase our board gender diversity to over 20%. We have continued to advance our focus on ESG and remain attuned to supporting our employees, our clients, and the communities that we do business in. We are proud of our progress on these important areas of corporate citizenship and hope you will review our recent annual report and 2021 ESG Tear Sheet on our website. With that, I will now turn the call over to Joaquin.