Evertec, Inc.

Hey, and welcome to the Evertech Third Quarter 2022 Earnings Call. All participants will be in listen-only mode. If 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. Please note that this event is being recorded. Now, I would like to turn the call over to Mr. Kevin Hunt of Investor Relations. Please go ahead, sir.

Thank you and good afternoon. With me today are Max Fischler, 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 gap 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 over the call to Max.

Thanks, Kevin, and good afternoon, everyone. Our business performed well in the quarter, despite the headwinds we faced, some of which we knew about coming into the quarter. and others that were unanticipated. Our Payments Puerto Rico and LATAM revenues continue to grow very well, driven by organic growth and also benefiting in part from the acquisitions that we completed during the year. In Payments Puerto Rico, the year-over-year growth was driven by a combination of strong POS transactions, ATH mobile business growth, and the contribution from the small acquisition completed in the second quarter. In Latin America, we continue to see very strong results driven by organic growth across the region, as well as the initial contribution from the VPR acquisition that closed on July 1st. In terms of expected headwinds, the impact from the popular transaction that closed on July 1st was in line with our expectations, as it affected year-over-year revenue growth and margins primarily in the business solutions and MAB segments. We also experienced some modest revenue and margin impacts from Hurricane Fiona over the final two weeks of the quarter, primarily in our merchant acquiring segments. Margin and EPS were also negatively impacted by a $7.8 million non-cash foreign currency remeasurement loss during the quarter, and Joaquin will provide more details on that in a few minutes. On today's call, I will start with the additional highlights from the quarter and will then turn it over to Joaquin, who will provide further details on our third quarter results, as well as an update to our 2022 outlook and high-level commentary on 2023. Beginning on slide four, total revenue was $146 million for the third quarter, flat when compared to the third quarter of 2021. Adjusted EBITDA was $52 million, a decrease of approximately 25%. And adjusted earnings per share was 40 cents, a decrease of approximately 35% from the prior year. Excluding the impact from FX remeasurement, adjusted EBITDA and adjusted EPS would have been $60 million and 53 cents, a decrease of 14 and 15% respectively. During the quarter, we returned approximately $41 million to our shareholders through dividends and share repurchases, and our liquidity remained strong at $344 million as of September 30th. Moving to our Puerto Rico update on slide five. Hurricane Fiona was an unfortunate event this quarter. We are happy to say that all our employees are safe and our own operations were largely unaffected by the hurricanes. That said, Fiona was a disruption to the island, and over the final two weeks of the quarter we did see an impact to the merchant acquiring segment, and to a lesser extent, our payment processing segment. Certain parts of the island, especially the western part, were hit hard and are still recovering from the heavy flooding and damage. In line with our community values, we are deeply committed to helping the island recover from tragedies like Hurricane Fiona. To that end, Immediately after the storm, we announced that we would donate up to $250,000 to help communities as well as our employees that were impacted by the storm. We enabled the donate feature on ATH Mobile to support hurricane relief, and for a two-week period, we matched specific donations made through the app. Turning to business results in Puerto Rico, merchant acquiring revenue was down slightly year-over-year given the tough comparable period and the impact from Fiona. Payments in Puerto Rico was up 15% on a year-over-year basis, as we continue to benefit from POS transaction growth and the contribution from ATH Mobile Business, as well as the small acquisition completed last quarter. Finally, our business solution segment was down 15% year-over-year. That decline was expected given the one-time credit granted upon closing of the Popular transaction. Additionally, as you may recall, we sold certain assets to Popular that had an annual revenue run rate of roughly $30 million. Now turning to Latin America on slide six. LATAM revenue growth was strong once again, up 26% compared to the prior year. We continue to see growth across the region with robust organic growth with existing customers in a number of countries. We also had a nice contribution from the VBR acquisition. I'm also very pleased to announce that we have expanded our relationship with MercadoLibre into Chile, further positioning us as a payments leader in the region. As a reminder, we currently provide issuing services for MercadoLibre in Mexico. And this expansion reflects our ability to create long-term partnerships with important clients in the industry, as well as the strength of our regional products. Additionally, I am pleased to announce that we have signed Grupo Evol as a new customer for our Place to Pay Gateway in Colombia. Grupo Evol is one of the largest banking groups in Colombia with over 18 million banking clients. We are excited by the opportunity to partner with such an important player in the region. Next, let's turn to slide 7 to cover a few additional items. Last quarter, we discussed the highlights of the POPULAR transactions, and one of the benefits we mentioned was the requirement that POPULAR reduces ownership of Evertech to under 5%, thereby freeing us from the Bank Holding Company Act. We are pleased to report that this goal has been achieved, and thus an obstacle to being more nimble in pursuing M&A transactions has been removed. As I already noted, the two acquisitions that we have closed this year are performing well, and we remain committed to finding more deals in Latin America. Finally, I would like to turn to our people. specifically our commitment to our scholarship program in Puerto Rico and Latin America. This program is now in its eighth year, and we are pleased to report that this year we awarded 186 scholarships for a total of $190,000. We are proud to have awarded over $1 million in scholarships over the last eight years and look forward to continuing to support higher education in both Puerto Rico and Latin America. With that, I will now turn it over to Joaquin to provide an in-depth look at our third quarter results.