Business Context and Reporting Period
Company: EVERTEC, Inc.
Filing Type: Form 10-Q (Quarterly Report)
Reporting Period: Three months ended March 31, 2026
Business Overview: EVERTEC is a leading full-service transaction processing business and financial technology provider in Latin America, Puerto Rico, and the Caribbean. The company operates four segments: Payment Services - Puerto Rico & Caribbean, Latin America Payments and Solutions, Merchant Acquiring, and Business Solutions. It owns the ATH debit network and provides core banking, cash processing, and IT outsourcing services.
Key Financial Metrics
| Metric (in thousands, except per share) | Q1 2026 | Q1 2025 |
|---|---|---|
| Total Revenues | $247,923 | $228,792 |
| Net Income (GAAP) | $24,747 | $33,091 |
| Net Income Attributable to Common Stockholders | $23,751 | $32,703 |
| Diluted EPS | $0.38 | $0.50 |
| Adjusted EBITDA (Non-GAAP) | $97,046 | $89,439 |
| Operating Cash Flow | $31,210 | $37,643 |
| Cash and Cash Equivalents (Ending) | $290,886 | $265,864 |
| Total Debt (Principal) | $1,104,795 | $1,098,880 |
| Revolving Facility Availability | $169.4 million | N/A |
Material Changes vs. Prior Period
- Revenue Growth: Total revenue increased 8% year-over-year to $247.9 million, driven by organic growth and the Q4 2025 acquisition of Tecnobank. The Latin America Payments and Solutions segment saw a significant 32% revenue increase.
- Profitability Decline: Net income attributable to common stockholders decreased 27% to $23.8 million. This was primarily due to a $2.9 million increase in foreign currency remeasurement losses and higher depreciation/amortization expenses ($37.3 million vs. $28.5 million) related to recent acquisitions.
- Expense Increases: Selling, general, and administrative (SG&A) expenses rose 32% to $47.8 million, driven by professional fees and contingent consideration payments. Cost of revenues increased 3% to $118.2 million.
- Segment Performance:
- Payment Services - PR & Caribbean: Revenue up 6%; Adjusted EBITDA margin improved to 59.4%.
- Latin America: Revenue up 32%; Adjusted EBITDA margin stable at 29.7%.
- Merchant Acquiring: Revenue up 2%; Adjusted EBITDA margin decreased to 40.3% due to higher processing costs.
- Business Solutions: Revenue down 9% to $59.5 million, impacted by a 10% discount on services to Popular, Inc. effective in Q4 2025.
- Capital Allocation: The company repurchased 683,253 shares for approximately $20.0 million and paid $3.1 million in cash dividends.
Guidance, Outlook, and Risks
- Outlook: Management expects continued growth driven by the migration from cash to electronic payments in Latin America and the Caribbean. The company anticipates declaring regular quarterly dividends of $0.05 per share, subject to board approval.
- Recent Acquisitions: Subsequent to the quarter end, EVERTEC acquired 100% of Dimensa (Brazil) for approximately $197 million and remaining interests in Rosk Software and Compliasset. These transactions were funded by existing liquidity and revolver capacity.
- Key Risks:
- Customer Concentration: Popular, Inc. remains the largest customer, accounting for approximately 26% of Q1 2026 revenues.
- Foreign Exchange: Significant exposure to currency fluctuations in Latin American markets, resulting in a $3.7 million unrealized loss in Q1 2026.
- Interest Rates: A 100 basis point increase in interest rates would increase annual interest expense by approximately $5.6 million.
- Regulatory: Exposure to evolving regulations regarding AI, data privacy, and global minimum tax (Pillar Two) rules effective January 1, 2026.
Investor Verification Checklist
- Popular, Inc. Relationship: Verify the impact of the 10% discount on Business Solutions revenue and the stability of the Master Services Agreement.
- Foreign Currency Impact: Assess the sustainability of earnings given the volatility in Brazilian and other Latin American currencies affecting both revenue translation and remeasurement losses.
- Acquisition Integration: Monitor the integration and accretive nature of the Tecnobank (Q4 2025) and Dimensa (Q2 2026) acquisitions, particularly regarding amortization expenses.
- Debt Covenants: Confirm continued compliance with the secured net leverage ratio (2.15x as of March 31, 2026) amidst increased debt levels from recent M&A activity.
- Share Repurchases: Review the remaining authorization under the $150 million repurchase program ($129.9 million remaining as of March 31, 2026).