Evertec, Inc.

Good afternoon, everyone, and welcome to Evertech's second quarter 2023 earnings conference call. Today's conference call is being recorded. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. I would now like to turn the conference over to Beatrice Brown-Signs 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 would 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 will now hand the call over to Mac.

Thanks, Beatrice. We provided some very exciting news on the M&A front last week, and we now have encouraging news on the earnings front. As previewed last week, we delivered strong second quarter results above our expectations. Revenue for all segments exceeded our internal plan, and margins were also above our expectations. On today's call, I'll start with some highlights from the quarter, and then we'll turn it over to Joaquin, who will provide further details on our second quarter results, as well as an update to our expectations for the rest of the year. which include another increase to our guidance for 2023. Beginning on slide four, total revenue was approximately $167 million for the first quarter, an increase of 4% compared to the second quarter of 2022. Adjusted EBITDA was approximately $74 million, a slight increase when compared with the prior year quarter. Adjusted EBITDA margin was 44.6% above our expectations, and adjusted earnings per share was 71 cents, an increase of 6% from the prior year quarters, adjusted EPS of 67 cents. As a reminder, we changed our calculation of adjusted EBITDA, adjusted net income, and adjusted earnings per share metrics last quarter to exclude the impact of non-cash, unrealized gains and losses from foreign currency re-measurement, and all variances against prior year have been compared against recasted figures considering this change. We generated operating cash flow of $126 million, and we returned approximately $22 million to our shareholders through dividends and share repurchases. Additionally, our liquidity remained strong at approximately $386 million as of June 30th. Moving on to our business update on slide five. In Puerto Rico, we experienced strong growth in both merchant acquiring and payment processing, with business solutions down as expected. Merchant acquiring revenue was up 7% year-over-year, driven by an increased spread per transaction as we continue to benefit from pricing actions taken last year in addition to a beneficial card mix, as well as an increase in sales volumes. Payments Puerto Rico was up 10% year-over-year and above expectations, reflecting increased transaction volumes, continued growth from ATH Mobile, and an increase from services provided to our LATAM segment. Our business solutions segment revenue was down approximately 12% year over year, as expected, due primarily to the assets sold as part of the popular transaction. I'd like to provide a few comments on the macro environment in Puerto Rico. The overall backdrop remains stable overall, and some of the economic data even picked up slightly in the second quarter after moderating late last year into the first quarter. The unemployment rate ticked up to 6.1% in May from 6% in prior months, but this is still near the lowest level in decades. The Economic Activity Index was up 1.8% year-over-year in the month of May, below the mid-single-digit growth for much of 2022, but an improvement over the modest declines experienced in the first quarter. Travel and tourism also accelerated in the second quarter, with year-to-date total airline passengers up 18% year-over-year. Auto sales also picked up from the first quarter, but were still down slightly year-over-year in the month of June. In sum, the macroeconomic environment remains supportive of growth, but at this point, we are not counting on significant tailwinds from the economy in 2023. Finally, turning to Latin America, revenue was up 27% year-over-year in the quarter, as the segment benefited from the revenue contributions of the VBR acquisition completed in the third quarter last year and the Paysmart acquisition completed in the first quarter of this year. We continue to experience double-digit organic growth across the region, driven in part by some of the business wins we have highlighted over the past year. And as discussed, we are excited about the potential for the Syncia acquisition to further strengthen Avertek's position in the region. This was a strong quarter that reflects our ability to execute our plans both organically and inorganically. I want to thank the team that worked really hard this past quarter to put us in the position of delivering great numbers while also executing on what is a game-changing deal for Avertek with Syncia. With that, I will now turn it over to Joaquin to provide a more in-depth look at our second quarter results and our increased outlook for 2023.