Evertec Inc. reported total revenue for the quarter ended Sept. 30, 2018 of $112 million, an increase of 9 percent compared with the $102.7 million reported during the same quarter last year.
The most recent results “exceeded our expectations,” company President Mac Schuessler said during a call with analysts, when he also said “we continue to benefit from Puerto Rico’s increased rebuilding and recovery activity.”
For the quarter ended Sept. 30, 2018, Adjusted EBITDA was $52.1 million, an increase of 25 percent compared to the prior year. Adjusted EBITDA margin (Adjusted EBITDA as a percentage of total revenues) increased 590 basis points to 46.5 percent compared with 40.6 percent in the prior year.
The increase in Adjusted EBITDA margin was primarily driven by growth over the hurricane impact in the third quarter of 2017 as well as favorable foreign currency impact of approximately 100 basis points in the quarter, the company noted.
“Given the third quarter results and our confidence for the remainder of the year, we are raising our guidance,” Schuessler said, including total consolidated revenue between $448 million and $452 million representing growth of 10 percent to 11 percent.
Meanwhile, he made reference to the Fiscal Plan recently approved by the Financial Oversight and Management Board for Puerto Rico, which includes the impact of projected federal and private insurance inflows of $82 billion over the next 15 years.
“New debt agreements as well as decreases in government spending, could result in a budget surplus over the next 15 years. While the updated fiscal plan is encouraging, there still needs to be structural reforms to jumpstart the economy for longer-term growth,” he said.
Regarding Puerto Rico’s debt restructuring, he said the decision by creditors to drop their opposition to restructuring approximately $4 billion issued by the Government Development Bank and the agreement reached with the Sales Tax Financing Corp. “are important steps for restoring Puerto Rico’s financial stability.”
“Relief funds to Puerto Rico continue to flow in and we’re benefiting from the continued release of private insurance payments as well as Housing and Urban Development funding and other expanded benefit programs,” he said.
During the quarter, Evertec saw stronger-than-expected revenue, which grew approximately 10 percent, driven by transaction growth of approximately 16 percent, and average ticket growth of 9 percent.
During the call, Schuessler discussed two areas of new business, both related to the government. Evertec has signed agreements to provide managed IT services to administer Community Development Block Grant disaster recovery program funds, and will provide business continuity and hosting services for the Puerto Rico Treasury Department to align with the government’s initiative to mitigate risks.
“This new business is an affirmation of our unique position in Puerto Rico and our ability to assist the ongoing mission critical efforts of the Puerto Rican government,” he said.
“Additionally, we have also recently signed a service support agreement with Banco Popular related to their recent acquisition of the Wells Fargo auto financing business,” he said.
During the third quarter, Evertec also benefitted from additional transaction fees for services such as ATH Móvil business and ATH Móvil switching fees.
“In summary, we’re pleased with the strong 2018 financial results and our progress on the strategic initiative that will deliver growth in 2019 and beyond,” he said.
For the nine-month period ended Sept. 30, 2018, Evertec reported revenue growth of 9 percent, to $335.6 million.