Evertec (EVTC) Q2 Earnings call transcript Jul 31, 2024

Evertec, a leading payment technology company, recently held its Q2 2024 earnings call, shedding light on its financial performance and strategic initiatives. The call was led by CEO Mac Schuessler and CFO Joaquín Castrillo, who provided insights into the company's revenue growth, margin expansion, and strategic focus areas.

Revenue Growth and Segment Performance

Evertec reported a 27% increase in revenue year-over-year, driven by strong transactional growth in Puerto Rico and Latin America, as well as the contribution from the Sinqia acquisition. The company's revenue growth was supported by improved net spreads and continued growth in its ATH and ATH Mobile business. Adjusted EBITDA for the quarter stood at $86.1 million, up 16% from the prior year.

The Merchant Acquiring segment led the way with a 10% year-over-year growth, while Payments Puerto Rico and Latin America showed strong growth as well. The Business Solutions segment also performed well, driven by a one-time project impact.

Margins and Operational Efficiency

Adjusted EPS for the quarter was $0.83, up 17% year-over-year. The company's adjusted EBITDA margin was 40.6%, down from the prior year due to the lower margin profile of the Sinqia business. However, the margin was above last quarter due to the revenue growth driven by the payment segments and the one-time impact in Business Solutions.

Evertec has been actively managing its cost of debt, with a successful repricing of its Term Loan B in May, effectively reducing its interest rate by 25 basis points. The company has also been focused on operational efficiency, with a strong liquidity position of $452 million as of June 30.

Strategic Focus and Outlook

Evertec is focusing on expanding its presence in Latin America, particularly in Brazil, where it acquired Sinqia. Despite some softness in the software market, Evertec remains optimistic about the prospects of this business, citing the strength of Sinqia's position in the market and the potential for growth. The company is also exploring opportunities to expand its product offerings and penetrate new markets.

The company's outlook for 2024 remains positive, with expectations for revenue growth of approximately 22% to 23% and adjusted EBITDA margin of around 39%. Evertec is focused on delivering operational excellence and margin optimization across all segments, with a particular focus on Latin America.

Conclusion

Evertec's Q2 2024 earnings call underscores the company's strong financial performance and strategic focus. With a solid revenue growth trajectory and a clear strategic direction, Evertec is well-positioned to capitalize on the opportunities in the payment technology market. The company's confidence in its ability to navigate market challenges and drive growth is a testament to its operational strength and strategic acumen. As Evertec continues to expand its footprint in Latin America and explore new growth opportunities, investors and stakeholders will be closely watching its progress.